Fire continues to blaze in the Grace Foam scandal, as fresh revelations suggest that the controversial government commitment to pay import taxes for the Chinese-owned company may never have ended, despite earlier claims that it expired in June 2024.
Just last week, we ran a story, revealing how the Ministry of Finance had, in a letter dated 20th September 2023, directed Uganda Revenue Authority (URA) to allow Grace Textile International Investments Ltd, commonly known as Grace Foam, to import its “intermediate textile inputs” at the cost of the Ugandan taxpayer. This wasn’t a tax exemption, nor a government loan, but straight cash from the national treasury.
The promise was meant to end on 30th June 2024. But even before the ink had dried on that supposed expiry, a URA tax demand dated 4th September 2024 showed the company had already racked up over UGX 17 billion in unpaid import taxes, raising questions like: had the money been paid? Was the deal ever enforced? Or was it quietly extended in silence?
Now, a new letter dated 18th April 2024 from URA has come to light, and it is only fanning the fire further.
The letter confirms that Grace Foam’s imports are still being facilitated under the same government-backed arrangement, and not a word about the June expiry.
No sign of a new agreement. Yet URA continues to process the company’s goods as if nothing changed, now evident that the deal, however unofficial, its extension may be, is very much alive.
No explanation has been offered to the public. Parliament was never informed of any renewal. But within URA and the finance ministry, letters are being passed across desks, with handwritten notes asking for clarity and legal footing, which is a clear sign that not everyone inside the system agrees with what’s going on.
To date, there’s no public record showing how much taxpayer money has already been paid to cover these imports, or whether the UGX 17 billion arrears mentioned earlier have since been cleared by government.
What stings the most is that this company has long been suspected of importing near-ready goods, already packaged and branded “Made in Uganda,” with minimal, if any value addition done on Ugandan soil, and this has left genuine Ugandan manufacturers shaking their heads in dissatisfaction.
Other companies, in the same field are reportedly paying taxes every month of over UGX 2 billion, some employing over 2000 Ugandans, and have never received a single shilling of help, but now these guys bring in finished products, and government pays for them.
This only deepen suspicions that this company is not just benefitting from an old policy, but is protected by something more discreet, possibly more powerful.
The complained about company reportedly employs fewer than 200 people. Yet it has been elevated to a level of fiscal privilege that even our largest manufacturers haven’t touched. What criteria were used? Who decided this deal was worth public money? No answers have come.
This letter is clear evidence that URA is just following instructions from above, creating tension, and questions, of who exactly is behind this Multi-billion deal.
This case is no longer just about one company, but now about fairness, the integrity of Uganda’s industrial policy, and whether the very idea of “Buy Uganda, Build Uganda” (BUBU) is being undermined from within.
More Revelations to follow in the coming days.
